• Economic governance

Economic governance

In-depth discussion of state-business relations has so far been largely limited to Asia countries. Measurement of state-business relations for sub-Saharan African countries has been absent. This paper fills this gap by measuring key factors associated with effective state-business relations for sub-Saharan African countries over the period 1970-2005. These key factors are:

• an organised private sector vis-à-vis the public sector
• an organized public sector vis-à-vis the private sector
• an institutionalised mechanism for state-business relations
• absence of harmful collusive behaviour

Based on these measures the study has assigned scores to 20 Sub-Saharan African countries over time and calculated a composite State-Business Relations time series for each country. An analysis of these scores shows that:

• higher scores are associated with faster growth
• new measures correlate well with other governance indicators
• they correlate with more operational investment climate data, such as few procedures when trading goods and services

The paper concludes by suggesting that an effective SBR can play an important role in economic growth. Effective SBRs drive a more optimal allocation of resources in the economy, including an increased effectiveness of government involvement in supporting private sector activities and removing obstacles.

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